Furthering Islamic finance in Indonesia

Source: BAPPENAS.

The Minister of Planning and Head of BAPPENAS (the Indonesian Ministry of National Development) Bambang Brodjonegoro spoke about Islamic finance and its development at the Economic Research Forum of Islamic Finance (FREKS XV) held in Mataram, West Nusa Tenggara.

In his speech, Minister Bambang noted that the Islamic financial system prohibits usury, speculation and speculative transactions. "The Islamic financial system does not allow lending against the value of the underlying assets, buying and selling debt and other trade deals. This is how Islamic finance differs from conventional finance. Through these principles Islamic finance has lasted much longer than conventional finance," he said.

Islamic economics is relatively new to Indonesia. It is limited to a few industrial subsectors such as media, recreation, food, clothing, finance, tourism, medicines and cosmetics, but the country leads in many of them.

"In the production of Muslim (modest) clothing Indonesia is ranked third-largest in the world. For halal food expenditure Indonesia is ranked first in the world and also ranked first in exporting halal vaccines to member countries of the Organisation of Islamic Cooperation (OIC)," said Minister Bambang.

The minister further called for new criteria to classify economic activities in Islamic economics.

He added that the Master Plan for Islamic Financial Architecture in Indonesia (SCAI) had been unveiled at the 12th World Islamic Economic Forum (WIEF) in Jakarta in August 2016.

"The launch of this document is to convey to the world and the people of Indonesia that governments and independent regulators have come together to develop an Islamic financial blueprint for Indonesia. It is a master plan with unbiased assessments and recommendations for the improvement of our Islamic financial system," said Minister Bambang.